What David can teach Goliath

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The 18th century Irish statesman Edmund Burke had said parsimony is not economy. Expense, and great expense, may be an essential part in true economy. Bharat Gala recognises the logic, if not the quotation. It helped him come to terms with having to dispose of his provisions store, Kamal, when the Reliance Industries Limited-acquired retail chain, Sahakari Bhandar, opened shop in his vicinity in Mazagon, Mumbai.

The store presaged things to come. Once a rundown government-owned chain of cooperative department stores, Sahakari Bhandar is today the base version of Reliance Retail. Before it arrived, Gala's Kamal General Stores was the unrivalled king of home supplies in the neighbourhood. It is today an unvisited franchise of Killer Jeans. The old kirana shop owner thought it wiser to cash in his chips while the going was good. "Department stores entice people to spend more. Isn't that what this economy wants?" he asks. "Department stores have more space;they arrange their goods attractively;they are better ordered;and most importantly, they offer discounts and freebies. But they can't pull off interpersonal relations like we could, home-deliver a bar of soap. "

Small retailers across the country are, perhaps for the first time stepping up to advertise their virtues. They weathered the onslaught of home-based mega-stores like Reliance Retail, Godrej Nature's Basket, Big Bazaar, Megamart, Hypercity and the dozen others as best they could, but business has undoubtedly taken a beating. A grocer in Andheri, Four Bungalows, who has been operating from a garage for the past four decades, says the present situation has driven him to offer credit and home-deliver even a tube of toothpaste. "People enjoy spending time in these big stores, " he says dispiritedly. "They buy more than what they need, and it's only in emergencies that they come to me. I've managed to survive, but barely, " he says.

There are some voices of optimism in the crowd. Like Hansraj, the owner of Mahavir, a shop on the busy Naupada area in Thane that has at least ten large franchises within a half-mile radius. He sells steel utensils and kitchen appliances, and is unfazed by the news of impending foreign competition.

"These foreign retailers come with a very different mindset. For instance, abroad, if an appliance stops working, customers will simply buy another one, whereas Indians would rather repair or exchange defunct products. This is where we score, " says the man.

Farther south, in Chennai, V Samuel, who runs a grocery shop on Triplicane High Road, strikes a similar high note. He says traffic to his counter hasn't thinned because he offers goods on credit and sometimes issues soft loans as well. "I trust my customers and I know that even if they buy goods on credit, they will pay me by the first week of the month, " says Samuel. "There are times when women ask for me a loan to treat their sick child and I oblige them. " M Amudha, who works as a maid in four houses and earns Rs 5, 000 a month, says she can afford to go only to the small shops. "Our neighbourhood shopkeeper has helped us out often and we are grateful to him, " she says. This personal bond between small grocers and customers is the biggest challenge for foreign supermarkets.

But many small shopkeepers are worried. Pawan Kumar Jain's grocery shop in Delhi has few buyers now. The opening of retail chains in his locality has severely dented his business;most of his old customers are heading to the Carrefour wholesale outlet in nearly Shahdara. To keep his head above water, the 58-year-old storekeeper has now resorted to a side business in money exchange.

Jain says buyers now prefer shopping in malls even for groceries, when earlier it was only clothes and appliances they looked for. "The entire market, which is a cluster of about 100 shops, is worried as the shadow of large retail chains lengthens, " says Jain, who also heads the local Seelampur market, a few kilometres down from the spanking new Carrefour.

Industry groups say the fears are misplaced. "Nobody has been able to show me any kirana shop which has closed down. And I have asked several people. In the next two decades I don't see any major displacement, " said Thomas Varghese, chairman of CII's Retail Committee. He points out that children of those who run mom and pop stores don't want to pursue their family business. With inputs by Sharmila Ganesan Ram in Mumbai, Daniel P George in Chennai, and Surojit Gupta in Delhi